Buyers 'spend third of time on manual processes'

A failure to make effective digital transformations is making procurement a “digital laggard” compared to other business functions and leading teams to drown in a sea of paperwork, according to a report.

A survey by Ivalua, a software provider, said procurement teams are spending 31% of their time dealing with inefficient paper-based or manual procurement processes.

Some 200 UK procurement, supply chain and finance professionals working in financial services, manufacturing, telecommunications and retail organisations with over 1,000 employees were canvassed as part of the report.

The company estimated this phenomenon is costing UK businesses on average £1.94m annually. According to the report 71% of respondents believed the overall rate of digitisation in procurement is low.

Two thirds of businesses still rely on manual and paper-based processes for supplier management.

And 64% believed the lack of digitisation is holding them back from doing their jobs. Eight in 10 (85%) considered procurement to be less digitally mature than other departments, such as marketing, human resources or accounting.

Although investments have been made in technology, only 45% of procurement processes have been digitised. Purchasing (45%), invoicing (41%) and budget management (39%) are the leading processes to fall into this category.

Supplier onboarding, sourcing and contract management are the three least-digitised processes.

As a result 77% of respondents faced limits on the time they can spend on strategic tasks while 70% saw obstacles in the way of automating low-value tasks like invoicing.

Two thirds (67%) believed paperwork is getting in the way of insights into supplier relationship management.

However 97% of businesses are investing in technology to digitalise procurement.

“Against the backdrop of an increasingly dynamic market, featuring Brexit and growing trade friction between the US and China, the role of procurement is becoming increasingly important,” said Alex Saric, chief marketing officer at Ivalua.

“Procurement is perfectly placed to help manage this growing risk landscape, support innovation and create sustainable cost savings. However, the lack of digitisation is holding procurement teams back.”

Ivalua said a major obstacle to digitalisation is supplier onboarding and previous research had found that the inability to onboard suppliers is the number one reason why many organisations switch technology providers.

“The process must be simple and not require suppliers to pay fees, accept vendor-imposed terms or limits on their activity – otherwise suppliers won’t sign up,” said the report.

“Organisations must remember that user adoption is not just achieved simply by deploying applications with intuitive interfaces – content is just as critical. Without suppliers being effectively onboarded, users can’t find the products or information they are looking for.”